Estate Clearance Certificate

[hdsomeday]

Need the 'expert' advice of the community here. I am executor of my mom's estate. Pretty simple...will....house and bank account...split between two people.

House was sold. Final T1 was filed and NOA received. Asked and received the T1 CRA Final Clearance. The Final Clearance has 3 check boxes (To Date of Death, Partial distribution and Final Distribution). Mine has the 'To Date of Death' checked. My lawyer told me once I receive the Clearance Certificate I was good to distribute the assets and close everything off.

Question.....Is this the only Clearance Certificate I need? My understanding is that the 'distribution' boxes have to do with the trusts and properties etc (T3). There is only cash to distribute. Lawyer said to ask my accountant (I dont have one) so I am asking here first before I have to go that route.

Thanks in advance for any help/advice/guidance.

 

[JZ67]

I wish I had an answer for you. A good estate accountant is affordable. We used Kevin Derbyshire. kevin@kd-cpa.ca 905-420-3330.

Not having the CRA up your azz down the road is well worth the investment.

 

[nobbie48]

I wish I had an answer for you. A good estate accountant is affordable. We used Kevin Derbyshire. kevin@kd-cpa.ca 905-420-3330.

Not having the CRA up your azz down the road is well worth the investment.

The one from the CRA covers what the estate owes the government and the executor is responsible if the estate funds are prematurely distributed. IIRC they take about 6 months to come through.

I don't know about non CRA debt and any responsibility that the executor might get hit with.

 

[ReSTored]

....................and the executor is responsible if the estate funds are prematurely distributed. .......................

As I'm sure you are aware you are responsible for any shortfalls in taxes paid to our friends at CRA.

Any and all professional fees are payable by the estate, not you. If there is any doubt in your mind as to the status / meaning of the clearance certificate you received hire an accountant get this clarified. You are not paying for this professional advice, the estate is. Last thing you want to do is distribute the estate to beneficiaries and then find out CRA wants $30,000. Good luck getting $$ back from the beneficiaries to pay this off.

 

[nobbie48]

As I'm sure you are aware you are responsible for any shortfalls in taxes paid to our friends at CRA.

Any and all professional fees are payable by the estate, not you. If there is any doubt in your mind as to the status / meaning of the clearance certificate you received hire an accountant get this clarified. You are not paying for this professional advice, the estate is. Last thing you want to do is distribute the estate to beneficiaries and then find out CRA wants $30,000. Good luck getting $$ back from the beneficiaries to pay this off.

Yup. A cousin was told by her dying of cancer ex, that he didn't owe anything and his money was to be shared by his three kids. She shelled out the money, the kids spent it largely on toys and then the CRA came knocking. Ugly.

 

[nobbie48]

I think CRA debt is fairly simple. Private debt is trickier.

I asked my lawyer to check on someone I had a beef with and it cost me $25 for him to do a search of the county the jerk lived in. Apparently judgement searches are done by counties, of which we have many. It gets fuzzy.

Judgments last forever but other debts have time limits, typically of two years, when they are non collectible unless renewed by admission or partial payment.

Is an executor cleared of responsibility by publishing a statement basically saying "speak up now or be cut out"?

 

[ReSTored]

Is an executor cleared of responsibility by publishing a statement basically saying "speak up now or be cut out"?

I'd ask your lawyer about this. I suspect you have to follow a specific process or you run the risk of getting shafted by a creditor coming out of the woodworks after estate funds have been distributed.

 

[nobbie48]

I'd ask your lawyer about this. I suspect you have to follow a specific process or you run the risk of getting shafted by a creditor coming out of the woodworks after estate funds have been distributed.

That would be my concern as well. We were in a dispute with a family member and while I was with my lawyer on other business I asked about unpaid debts etc. I gave him the county of residence and he ran a check with nothing coming up. It was a subscription service he went on and there was a fee for each check. I wasn't going to put a grand into the search.

If you had a judgement against someone from ten years ago and they inherited a bundle you could theoretically scoop what you were owed. Similarly they came up with a down payment for a house.

It would be nasty but so is not paying your debts. It only seems logical that there would be a centralized search option.

 

[ReSTored]

................It only seems logical that there would be a centralized search option..................

Sorry, I should have been clearer in my response.

I was not referring to performing a search. I was suggesting to speak to your lawyer to determine how and where to publish a notice advising of the death and timeline to contact you to notify you of same. The notice would stipulate that failure to notify you of the debt would constitute acknowledgement that the debt would be effectively cancelled, and not collectable.

Award-Winning Executor Online Guide

Province-specific steps for settling an estate, with companion webapp to automatically track everything and generate required reports

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In Ontario, there is no requirement to publish a notice of death, but doing so can minimize estate trustee liability. The Ontario Trustee Act does not specify a required method for such publication, but it has been common to publish a notice a newspaper of general circulation where the decedent lived, once a week for 3 successive weeks. In 2017, it was also ruled legal to use an online service instead. The Trustee Act also refrains from mentioning a specific expiration period, but common practice has been to specify in the publication that creditors have at most 30 days (from the date of last publication) to make any claims.

In Ontario, a creditor has 2 years to make claims concerning most unsecured debts (see Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, § 4). However, this 2-year period resets whenever a debtor acknowledges or makes a payment towards that debt, so as an Ontario estate trustee, you must be careful about inadvertently revitalizing a debt that was already barred or about to be barred (see Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, § 13).

An estate trustee can be held personally liable if he or she distributes estate funds to the point that the estate cannot pay debts that subsequently become known before their statutes of limitation expire. Fortunately, an estate trustee can escape liability if he or she waits to distribute funds until after the expiration period specified in a published notice to creditors. A creditor whose claim has not yet expired, but of whom the estate was unaware, can still pursue repayment from the recipients of distributed funds, but the executor would normally be protected from any such claims. See Trustee Act, RSO 1990, c T.23, § 53.